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In 2014, the US Government Accountability Office issued a report on cost estimates for the US Air Force's program to launch national security payloads, which at the time consisted of a fleet of rockets maintained and flown entirely by United Launch Alliance (ULA). The report was critical of the non-transparent nature of ULA's launch prices and noted that the government "lacked sufficient knowledge to negotiate fair and reasonable launch prices" with the monopoly.

At around the same time, the new space rocket company SpaceX began to aggressively pursue the opportunity to launch national security payloads for the government. SpaceX claimed to offer a substantially lower price for delivering satellites into various orbits around Earth. But because of the lack of transparency, comparing prices was difficult.

The price uncertainty was largely due to the fact that the government pays both a firm, fixed-price cost for the rocket used for each ULA launch—be it an Atlas V, Delta IV, or Delta IV Heavy—as well as a cost-plus incentive fee known as an ELC contract. This ELC contact was essentially a payment to ULA to maintain "launch readiness" for critical national security payloads. And the large-rocket company, co-owned by Boeing and Lockheed Martin, put the money to good use with a perfect launch record for the federal government. To critics, however, this large, nebulous payment amounted to an anti-competitive subsidy once SpaceX began offering the Falcon 9 rocket as a viable alternative.

Now, transparency is coming to the federal launch market, allowing lawmakers to more directly compare the costs of ULA's launch vehicles against those of new space competitors, such as SpaceX. Because of the fiscal year 2016 National Defense Authorization Act, the Air Force budget request must consolidate rocket launch costs into a single budget line beginning in fiscal year 2020.

A $422 million launch?

The Air Force recently released budget estimates for fiscal year 2018, and these include a run out into the early 2020s. For these years, the budget combines the fixed price rocket and ELC contract costs into a single budget line. (See page 109 of this document). They are strikingly high. According to the Air Force estimate, the "unit cost" of a single rocket launch in fiscal year 2020 is $422 million, and $424 million for a year later.

Further Reading

This is a complex number to unpack. But based upon discussions with various space policy experts, this is the maximum amount the Air Force believes it will need to pay, per launch, if United Launch Alliance is selected for all of its launch needs in 2020. ULA launches about a half-dozen payloads for the Air Force in a given year, on variants of its rockets. Therefore, the 2020 unit cost likely includes a mix of mostly Atlas V rockets (sold on the commercial market for about $100 million) and perhaps one Delta rocket launch (up to $350 million on the commercial market for a Heavy variant).

One person who has reviewed the Air Force budget and is sympathetic to the new space industry said the following:

That is a tad more expensive than the amount ULA would ever tell taxpayers they are paying for one of its launches, and it illustrates the extent to which those taxpayers are forced to subsidize ULA in order to maintain the fiction that it is a competitive private sector company.

Essentially, then, while ULA has talked publicly about lowering the costs of its boosters for the commercial sector and the federal government, the US Department of Defense is suggesting in its budget that ULA's costs are as high as they have ever been. In response to a media query from Ars, a spokeswoman for the Colorado-based United Launch Alliance referred questions to the Air Force. (Update: On Friday morning the chief executive of United Launch Alliance, Tory Bruno, responded to the article on Twitter, calling it "misleading." He did not provide additional cost details, however.)

SpaceX costs are lower

The ULA monopoly ended when SpaceX began to compete for national security payloads alongside ULA, and launch them. (The California-based company's first national security launch, a National Reconnaissance Office spy satellite, came in May). And side-by-side the government's estimates for ULA launches, SpaceX's costs appear to be considerably lower.

For example, about 14 months ago, the Air Force awarded SpaceX an $83 million contract to launch a GPS 3 satellite. And in March 2017, SpaceX won a contract to launch another GPS 3 satellite for $96.5 million. These represent "all-in, fully burdened costs" to the government, and so they seem to be roughly comparable to the $422 million "unit cost" in the Air Force budget for 2020.

Further Reading

SpaceX sells basic commercial launches of its Falcon 9 rocket for about $65 million. But, for military launches, there are additional range costs and service contracts that add tens of millions of dollars to the total price. It therefore seems possible that SpaceX is taking a loss or launching at little or no profit to undercut its rival and gain market share in the high-volume military launch market.

The deal appears to be a good one for taxpayers, regardless. During a congressional hearing earlier this month, new Air Force Secretary Heather Wilson acknowledged this by saying, "The benefit we're seeing now is competition. There are some very exciting things happening in commercial space that bring the opportunity for assured access to space at a very competitive price." A careful reading of the new Air Force budget provides an inkling of just how great those savings might be.

You know, maybe they are still actually making a profit. Sure, there are lots of extra costs, but if the all-in price is ~$65 million and they're launching for roughly $89M-$97M, they might not be inflating the actual extra costs and just passing those extra costs along as is to the USAF. So they still make a decent profit for that flight, just not as much as if the gouged for the extras like ULA does apparently.

So ULA has rockets that cost about $100m and the gov pays about $420m to use them for military purposes. Meanwhile SpaceX has rockets that cost about $65m and the gov pays about $100m to use them for military purposes.

It doesn't sound like SpaceX is deliberately undercutting the competition so much as ULA pocketing about $280 million dollars per launch. There's no way that SpaxceX is just writing off a $200m loss every time they launch for the military.

I know you have to protect sources that want to remain anonymous and all, but from a journalism standpoint, the following is absolutely meaningless without more context:

Quote:

One person who has reviewed the Air Force budget and is sympathetic to the new space industry said the following:

That is a tad more expensive than the amount ULA would ever tell taxpayers they are paying for one of its launches, and it illustrates the extent to which those taxpayers are forced to subsidize ULA in order to maintain the fiction that it is a competitive private sector company.

Even if SpaceX was taking a "loss" or not much of a markup on the launch of a military package, as long as they can get that first stage back they are making bank. Simply because they can refurbish that stage and reuse it later to launch another piece of kit.SpaceX even has "new" and "used" pricing to reflect that.

Whereas ULA must make a new rocket every single time.

I still would like to know what kind of margin ULA and SpaceX has on their prices.

I know you have to protect sources that want to remain anonymous and all, but from a journalism standpoint, the following is absolutely meaningless without more context

A fair criticism, but I think you already know the answer. Can't burn the source who tipped me off about this. I could just have not used the quote, but I thought it provided some perspective on how critics of ULA see this issue.

Even though I know that the FH will be substantially cheaper than the Delta IV Heavy, I think we should do our best to compare apples to apples since I don't think it's really fair to compare the Falcon 9 to the Delta IV Heavy. Still, the Air Force has gone on record saying that they like competition, and by that criteria, ULA is screwed.

Edit: I've been corrected by Mr Berger, and goes to show that I've been up for far too long..

So ULA has rockets that cost about $100m and the gov pays about $420m to use them for military purposes. Meanwhile SpaceX has rockets that cost about $65m and the gov pays about $100m to use them for military purposes.

It doesn't sound like SpaceX is deliberately undercutting the competition so much as ULA pocketing about $280 million dollars per launch. There's no way that SpaxceX is just writing off a $200m loss every time they launch for the military.

This isn't necessarily ULA (just) being greedy. The Pentagon has a vested interest in having a domestic launch provider, and so they may be consciously subsidizing ULA to keep them afloat. Without if both ULA and SpaceX fail, the Pentagon would be forced to scramble to find a launch provider, and most of the other options are nations that we probably don't want to give access to sensitive payloads.Of course, once SpaceX has demonstrated that they are reliable, both in terms of their design and long term financial viability, there is fare less justification for subsidizing ULA.

SpaceX's costs are lower because they don't have nearly the same quantity of red tape as a government agency does. It's the whole reason why companies lobby the government to privatize organizations and technology in the first place; lower overhead and quicker decision making.

On the flipside, I don't believe that these rockets are as well-tested when compared to what the government offers. These could be riddled with problems due to cutting corners, and nobody will find out until we have another Falcon 9 incident.

Say what you will about government waste, but I don't trust anything that Elon Musk produces. He treats his workforce like garbage and readily admits that he falls victim to hubris. Megalomaniacs like him are not interested in the well-being of plebs, and will end up wasting more time, money, and resources in the long term than we would if we pursue the route that is regulated, accountable, and NOT profit-driven.

Whereas the CEOs Lockheed and Boeing, slurping billions upon billions of taxpayer money, are just paragons of fucking righteousness and perfection.

It's worth noting that Elon Musk has done more personally for the "well-being of plebs" than probably any single person of power in the US government today. His efforts to get us off of oil and reduce carbon dioxide emissions might be making him rich, but that doesn't change that it's good for all of us.

SpaceX's costs are lower because they don't have nearly the same quantity of red tape as a government agency does. It's the whole reason why companies lobby the government to privatize organizations and technology in the first place; lower overhead and quicker decision making.

On the flipside, I don't believe that these rockets are as well-tested when compared to what the government offers. These could be riddled with problems due to cutting corners, and nobody will find out until we have another Falcon 9 incident.

Say what you will about government waste, but I don't trust anything that Elon Musk produces. He treats his workforce like garbage and readily admits that he falls victim to hubris. Megalomaniacs like him are not interested in the well-being of plebs, and will end up wasting more time, money, and resources in the long term than we would if we pursue the route that is regulated, accountable, and NOT profit-driven.

Are you under the impression that ULA is a government agency? They are a for-profit corporation owned by Boeing and Lockheed.

This isn't necessarily ULA (just) being greedy. The Pentagon has a vested interest in having a domestic launch provider, and so they may be consciously subsidizing ULA to keep them afloat.

To keep them afloat? At above mentioned $280m extra pocketed money per launch, of which there are 12 or so a year?

If they make a commercial flight at $100m, I'd understand if they charged maybe 50% extra - a bit for extra security, a bit for this readiness thing (although since they're always launching, regularly, and the government knows that, they shouldn't even need much more extra to secure their support chain). But they charge 400% of the normal price. That's not keeping them afloat.

You know, this cost-plus thing in US seems pretty much like our bloated EU governments, except that way more money gets shifted to private pockets.

You're absolutely right, this is a complex number to unpack, but you still went ahead and used it to show ULA in a negative light, while showing your buddies in Hawthorne as wonderful and without sin. Oh well, at least ULA hasn't lost a customer's satellite like SpaceX has....

…and SpaceX hasn't been party to the deaths of tens of thousands, if not hundreds of thousands of civilians like Boeing and Lockheed have.

SpaceX's costs are lower because they don't have nearly the same quantity of red tape as a government agency does. It's the whole reason why companies lobby the government to privatize organizations and technology in the first place; lower overhead and quicker decision making.

On the flipside, I don't believe that these rockets are as well-tested when compared to what the government offers. These could be riddled with problems due to cutting corners, and nobody will find out until we have another Falcon 9 incident.

Say what you will about government waste, but I don't trust anything that Elon Musk produces. He treats his workforce like garbage and readily admits that he falls victim to hubris. Megalomaniacs like him are not interested in the well-being of plebs, and will end up wasting more time, money, and resources in the long term than we would if we pursue the route that is regulated, accountable, and NOT profit-driven.

I get that you work for ULA and are angry because your pig trough job is going away soon. But let's stick to facts.

Read the Musk letter to employees at Tesla. He and management are going to perform each job that resulted in an injury personally. You better believe that will result in fixes. Also, never heard of anyone else doing this.

You claim F9 may have flaws. Possibly, but they will be found and fixed as well. Like every other rocket out there, it is a process that yields steadily improving safety. Well, unless it's Russia and then who the hell knows, they have regressed at times.

Meanwhile I point at the shuttle as a system with one of the worst records out there. And it was person rated. And made by these companies you love so much. Sad!

Finally let's address your red tape crap. Is it red tape that makes them build components in each of the states and territories and D.C.? Or is it just cynical greedy bullshit to get politicians to vote for your crap despite all logic, reason or economics? Yeah, that's what I thought.

This isn't necessarily ULA (just) being greedy. The Pentagon has a vested interest in having a domestic launch provider, and so they may be consciously subsidizing ULA to keep them afloat.

To keep them afloat? At above mentioned $280m extra pocketed money per launch, of which there are 12 or so a year?

If they make a commercial flight at $100m, I'd understand if they charged maybe 50% extra - a bit for extra security, a bit for this readiness thing (although since they're always launching, regularly, and the government knows that, they shouldn't even need much more extra to secure their support chain). But they charge 400% of the normal price. That's not keeping them afloat.

You know, this cost-plus thing in US seems pretty much like our bloated EU governments, except that way more money gets shifted to private pockets.

Except that they aren't. It's the maximum price for a launch, not the average price, or the price they'll pay for each one. That means it's the cost of a Delta IV Heavy launch, not what they're budgeting for an Atlas V, or the last pairs of of Delta IVM and Delta 2 launches (after 2 more of each, ULA is retiring both of those designs and will only do Altas V or Delta IVH), or Vulcan (assuming it's flying by then). All of the latter are around $100m (probably a decent bit less for the last Delta II's).

Until Space X has flown several Falcon 9 Heavy's ULA has no competition in that market segment. And if the giant radio spysats (football field sized antennas) are among the launches that need vertical assembly (because the satellite would crush itself if tipped onto its side); then SpaceX is still out unless they make a vertical assembly building or the govt redesigns its ELINT platform to support itself while tipped over. IIRC they are, but the potential to fly even larger antennas mean that once F9H is proven in flight they probably will redesign for it; but the design work will move at the speed of government. Which means that unless SpaceX makes a VAB with their own money to cut in on the ULA it probably won't happen until outside the current budgetary planning period.

SpaceX just needs to start charging half as much as ULA to get a HUGE budget toward building BFR and their LEO fast internet swarm.

They're already charging a quarter as much which is the kind of difference that topples empires. Imagine if Telsa were selling a brand new Model 3 for $6000.

Right, that's why I think they should charge half. The government still saves a huge amount of money over ULA, and SpaceX gets a lot of cash to dump into R&D to further accelerate their progress and further cut the cost of access to space.

SpaceX's costs are lower because they don't have nearly the same quantity of red tape as a government agency does. It's the whole reason why companies lobby the government to privatize organizations and technology in the first place; lower overhead and quicker decision making.

On the flipside, I don't believe that these rockets are as well-tested when compared to what the government offers. These could be riddled with problems due to cutting corners, and nobody will find out until we have another Falcon 9 incident.

Say what you will about government waste, but I don't trust anything that Elon Musk produces. He treats his workforce like garbage and readily admits that he falls victim to hubris. Megalomaniacs like him are not interested in the well-being of plebs, and will end up wasting more time, money, and resources in the long term than we would if we pursue the route that is regulated, accountable, and NOT profit-driven.

Found the hater. Who doesn't even realize that ULA is also a private company, not a government agency.

You're absolutely right, this is a complex number to unpack, but you still went ahead and used it to show ULA in a negative light, while showing your buddies in Hawthorne as wonderful and without sin. Oh well, at least ULA hasn't lost a customer's satellite like SpaceX has....

Well no, ULA is a recent thing. The death and destruction of their vehicles are from the initial R&D phase.

This isn't necessarily ULA (just) being greedy. The Pentagon has a vested interest in having a domestic launch provider, and so they may be consciously subsidizing ULA to keep them afloat.

To keep them afloat? At above mentioned $280m extra pocketed money per launch, of which there are 12 or so a year?

If they make a commercial flight at $100m, I'd understand if they charged maybe 50% extra - a bit for extra security, a bit for this readiness thing (although since they're always launching, regularly, and the government knows that, they shouldn't even need much more extra to secure their support chain). But they charge 400% of the normal price. That's not keeping them afloat.

You know, this cost-plus thing in US seems pretty much like our bloated EU governments, except that way more money gets shifted to private pockets.

Except that they aren't. It's the maximum price for a launch, not the average price, or the price they'll pay for each one. That means it's the cost of a Delta IV Heavy launch, not what they're budgeting for an Atlas V, or the last pairs of of Delta IVM and Delta 2 launches....

Huh? The article specifically states that it's the unit price for each launch in that year, logically implying an average. It even states that the launches are "mostly Atlas V" and "perhaps one Delta." It's not a maximum. Not at all.

So ULA has rockets that cost about $100m and the gov pays about $420m to use them for military purposes. Meanwhile SpaceX has rockets that cost about $65m and the gov pays about $100m to use them for military purposes.

It doesn't sound like SpaceX is deliberately undercutting the competition so much as ULA pocketing about $280 million dollars per launch. There's no way that SpaxceX is just writing off a $200m loss every time they launch for the military.

No, the falcon 9 rocket cost is significantly less than that -- that's the LAUNCH price. SpaceX doesn't sell the rocket a la carte.

You're absolutely right, this is a complex number to unpack, but you still went ahead and used it to show ULA in a negative light, while showing your buddies in Hawthorne as wonderful and without sin. Oh well, at least ULA hasn't lost a customer's satellite like SpaceX has....

Even if there's a higher risk of failure (let the insurers work it out), for what ULA charges for a launch it's enough to pay for both the rocket AND the satellite on SpaceX. No one is so risk averse to justify paying for a ULA launch.

Even though I know that the FH will be substantially cheaper than the Delta IV Heavy, I think we should do our best to compare apples to apples since I don't think it's really fair to compare the Falcon 9 to the Delta IV Heavy. Still, the Air Force has gone on record saying that they like competition, and by that criteria, ULA is crewed.

I know it's not quite fair, since you could have twice the payload on a Falcon Heavy. Heck, you can likely just expend the center core of FH and still send any payload that Delta IV can throw.

Now, the DIVH upper has noticeably more endurance - but there are hints that SpaceX is really working that problem.

Even though I know that the FH will be substantially cheaper than the Delta IV Heavy, I think we should do our best to compare apples to apples since I don't think it's really fair to compare the Falcon 9 to the Delta IV Heavy. Still, the Air Force has gone on record saying that they like competition, and by that criteria, ULA is crewed.

If you read the article carefully, I explicitly write that the $422 million price is probably the average of several Atlas V launches and one Delta launch, about what ULA does now for the Air Force on an annual basis. This is to some extent supposition, based upon two exchanges with space policy experts who understand the federal budget.

Am I the only one that thought the picture was from Kerbal Space Program? I am looking at it now and I really can't tell the difference.

FYI Elon Musk is against public subsidies but has received so much himself. This is not "capitalism works." This is "the government gave him a bunch of money and he figured out how to do it better." Good for him. Lets do more of that with the understanding that 9 times out of 10, it won't work that way.

SpaceX didn't get anything remotely like the insane contracts that the military industrial complex usually gets. He's also not against public spending since he's explicitly said that without money and expertise from NASA he wouldn't have succeeded with SpaceX.

Even if SpaceX was taking a "loss" or not much of a markup on the launch of a military package, as long as they can get that first stage back they are making bank. Simply because they can refurbish that stage and reuse it later to launch another piece of kit.SpaceX even has "new" and "used" pricing to reflect that.

Whereas ULA must make a new rocket every single time.

I still would like to know what kind of margin ULA and SpaceX has on their prices.

There's nothing I've seen that says their refurbished rockets are currently saving them much money. These rockets weren't built primarily for reuseability like their newer ones will be. The current ones need a lot of refurbishment and inspections to re-certify them for flight -- at least that's my understanding.

Getting the knowledge of what goes on when you try to re-fly a booster, however, is priceless.

This isn't necessarily ULA (just) being greedy. The Pentagon has a vested interest in having a domestic launch provider, and so they may be consciously subsidizing ULA to keep them afloat.

To keep them afloat? At above mentioned $280m extra pocketed money per launch, of which there are 12 or so a year?

If they make a commercial flight at $100m, I'd understand if they charged maybe 50% extra - a bit for extra security, a bit for this readiness thing (although since they're always launching, regularly, and the government knows that, they shouldn't even need much more extra to secure their support chain). But they charge 400% of the normal price. That's not keeping them afloat.

You know, this cost-plus thing in US seems pretty much like our bloated EU governments, except that way more money gets shifted to private pockets.

Except that they aren't. It's the maximum price for a launch, not the average price, or the price they'll pay for each one. That means it's the cost of a Delta IV Heavy launch, not what they're budgeting for an Atlas V, or the last pairs of of Delta IVM and Delta 2 launches....

Huh? The article specifically states that it's the unit price for each launch in that year, logically implying an average. It even states that the launches are "mostly Atlas V" and "perhaps one Delta." It's not a maximum. Not at all.

That's US Govtspeak. Any resemblance to normal English is purely coincidental, and will be fixed in a future round of obfuscation. Read the next paragraph, for translation into normal english.

The article wrote:

This is a complex number to unpack. But based upon discussions with various space policy experts, this is the maximum amount the Air Force believes it will need to pay, per launch, if United Launch Alliance is selected for all of its launch needs in 2020.

(emphasis mine).

I took that to mean "worst-case average" maximum, not per-flight maximum.

You're absolutely right, this is a complex number to unpack, but you still went ahead and used it to show ULA in a negative light, while showing your buddies in Hawthorne as wonderful and without sin. Oh well, at least ULA hasn't lost a customer's satellite like SpaceX has....

Couple of comments on that:

ULA was handed three fully developed, debugged launch platforms at the inception of ULA and haven't done anything to innovate since. No wonder they keep working with few issues. All they have to do is keep doing the same-old same-old.

Second - how many of those rockets has ULA recovered, let alone re-used?

Oh, and ULA may not have lost a satellite, but they have sure put one in the wrong orbit and come DAMN close to losing an ISS cargo run - only the excess margin in the upper stage saved that one. Barely. A payload closer to launch limits would have resulted in mission failure.